In a shared ledger, conventionally, at any given time there is one assigned machine or account in charge of all shared ledger transactions including the order of transactions, the processing of the transactions, etc. With BITCOIN, there is one party in charge of managing the transactions which may include multiple different miner entities, however, one party is still in charge of the management effort for any particular block that goes into the chain.
Blockchains are data structures introduced in concert with Bitcoin. The aim is to ensure secure records of transactions between multiple parties so that records are secure and cannot be tampered with or falsified. Certain features include witnessing, where multiple participants maintain copies, cryptographic signatures for authentication, and public/private key cryptography for privacy. Currently, there are certain issues associated with scaling, witnessing, and the structures of shared ledgers. The aim is to provide a framework for scalable, efficient and trustworthy shared ledgers. Witnesses otherwise known as ‘endorsers’ or ‘observers’ are parties to a transaction solely for the purpose of proving the transaction took place and/or is valid.
In the BITCOIN shared ledger, any participant can be a party to a transaction. These transactions are then gathered into blocks by participants who have performed the requisite proof-of-work. Once finalized, the transaction, and, in turn, blocks are then added onto the chain. Conflicting transactions are generally eliminated via curtailing forks in the chain. This is performed by simply eliminating the shorter chain following a fork. The BITCOIN chain is self-contained, in the sense that it deals with quantities entirely held in the chain. Other applications of shared ledger notions deal with quantities outside the chain, for example, securities or moneys, and the concept of proof of work does not apply, such as in a shared ledger. In that example, transactions are often performed one at a time, in a sequential order via a multi-step protocol. The protocol involves multiple messages per transaction. Transactions performed in a given time period are then gathered into a block by a designated leader for that period. Blocks are then assembled into a sequence or chain.
In BITCOIN, miners are ultimately responsible for shared ledger transaction finalization. The conventional approach to processing transactions may be deemed not-scalable. With shared ledgers or distributed ledgers being adopted for interactions between various parties, the conventional approaches lack scalability due to a single point of synchronization and the size of the witness set.